Why I should outsource software development?
This is a question that I’ve been asked lately by one of our potential clients. The first quick thought of mine was, you should outsource a project anytime you don’t feel to be an expert at something and/or you don’t have enough time to solve the related problem.
Outsourcing is like delegating tasks – if you will not learn it, you will not find enough time to grow your business. Learn to let go and find experts either in-house or offshore/nearshore to build the best possible software for you.
Working with software development company will help you for sure to solve three things:
- How to reduce fixed costs
- How to speed up/scale your development team
- How to find skilled developers fast
You can say that today software development outsourcing is a kind of external SaaS tool to grow a technology behind your business.
#Reduce a Software Development Cost
Have you ever wondered, what is your true employee cost? Based on research from Joe Hadzima, a senior lecturer from MIT, the true cost of your new in-house developer could be 2.7x the base salary. If you cover all employment taxes, benefits, rent, equipment, and all non-billable hours (organization, meetings, trainings, business trips, team integration events etc.), you could pay, for a full-time developer, not only $100k, but it could add up to $270k!
A platform for freelancers Toptal, made a tool to calculate the true cost of an employee and consultant. Based on their research, the base rate for an internal employee of $50 per hour will double to up to $100 per hour if you add all the costs. For a consultant, the cost of the same hour for $50 will in the end cost no more than $60.
It’s a huge saving per one in-house developer.
Reduce your hiring mistakes
Hiring the right people is extremely hard, even for experienced recruiters or leaders.
Welch also maintains that if you get the hiring right over 50% of the time, consider yourself talented at executive search consulting and recruitment services. (source)
Jack Welch, ex-CEO of GE
As a leader of a company (even though you are not finding the candidates yourself), you will need to spend time interviewing the candidates – this takes time, and you have to pay somebody to find the right candidate, and in the end while hiring, someone to do the on-boarding, get the paperwork done, and somebody to buy/configure new computer and more….
Based on a report from DevKillers, it takes around 43 days to find a new developer (often they have a 3 month period before leaving a company) and this will cost you between $22k-$32k (depending on whether you are doing it in-house or using an agency to do it for you).
It’s a lot of investment before you will get a Return-On-Investment. Remember, that this investment could cost you around 50% of all costs mentioned above.
Answer yourself, is it worth to hire always in-house developers?
Increase your team skills at any time and scale the team
Outsourcing (it doesn’t matter if we talk about custom software development outsourcing, content marketing, or sales) is almost like an on-demand service. You know clearly your costs per hour or man-day for each outsourced consultant or developer.
It’s like using one of Amazon’s Web Services to scale the capacity – just drag-and-drop a trigger to scale your external team and their skills you need at the moment.
Of course, it takes time (more or less 1 month), but it’s still a faster and cheaper solution than hiring new resources to help you.
Today, you can add/switch developers on a project. If you need more front-end or backend or UI skills you can do it easily with an external development partner.
So, next time before you decide to hire an in-house developer be sure that you really need one in-house.
Working Remotely is becoming a world-wide standard
Last week, I read about another company, Automattic (WordPress creators worth over $1 billion), who closed an amazing 14k square foot office in San Francisco, because most of the time the team of 550 people was working remotely…
GitLab from day one is a fully remote company. Almost 160 people are working together on a platform for developers and none of them are sitting in the same office (watch the interview with Sid Sijbrandij GitLab’s CEO https://blog.ycombinator.com/gitlab-distributed-startup/)
Focus on your core business
I’m not saying that you have to outsource the whole IT Department or all of your software development activities like Fab did by working with a fully outsourced software product development team of 300 people. They did it to focus only on their core business and those things that they are best at – you should do the same.
- If you are great at marketing automation – you don’t have to develop the product on your own
- If you are great at selling real estate – you don’t have to develop a system to gather leads online
- If you are an amazing musician and you have a huge network in the music industry – you don’t have to build and develop the next Spotify on your own.
Focus on your strengths and outsource all other things. Building a software development department/team in your company is like building a company inside your company.
Think about this this way.
Do I want to build a software development company or build a business that I am currently running?
Corporates, outsource to get things done faster
If you worked in a corporation before or even a bigger organization of >250 people then you probably know that getting new things done takes a lot of time. You have great ideas to optimize business costs, implement a new CRM system, or build a mobile app that customers of your company will love.
Contact Us Here to Outsource your Software Development Needs